Demand for Rental Apartments in GTA Reaches Record High
Although home prices are declining month-over-month (but not year-over-year) and sales are decreasing in Mississauga and surrounding cities (a sign of returning balance, experts say), the rental market still appears to be on fire.
A recent report released by Urbanation, an organization that specializes in the Toronto and GTA condo market, revealed that condo rents have grown by 11 per cent to surpass $2,000 for the first time.
Urbanation says the uptick was noted during the second quarter of 2017, the same period in which the Ontario government announced its Fair Housing Plan (a plan that will, among other things, expand rent control to units built later than 1991). According to Urbanation, condo lease transactions rose to an all-time high, rent growth re-accelerated to a double-digit pace, vacancies dropped to almost zero and fewer new rental projects were announced.
According to the report, 8,328 condo apartments were leased through MLS in the Greater Toronto Area, a 12 per cent year-over-year increase that even surpassed the previous high set in 2015 (8,202 units).
Interestingly enough, some of the activity can be attributed to an increase in new supply, as total listings rose eight per cent annually because more condos were completed and available for rent.
That said, Urbanation points out the ratio of leases-to-listings reached a new record of 87 per cent and active listings at quarter-end fell 13 per cent from a year ago to 1,125 units -- the lowest Q2 level since the organization began tracking the data in 2011 (and equal to only two weeks of supply).
In terms of rental rates, they're up too.
Urbanation says condo rents increased by 10.7 per cent year-over-year, more than doubling the five-year average of 4.5%. Prospective renters might be concerned to hear that the average rent level surpassed the $2,000 threshold for the first time to hit $2,073).
And while house sales are down, it looks like rental units in the 416 and 905 are being snapped up pretty quickly.
"Urbanation's survey of purpose-built rental buildings completed since 2005 revealed that average rents for available units increased by 11.0 per cent annually to $2.67 psf in Q2-2017," the report reads. "Vacancy rates within this newer stock of rentals was almost non-existent at an average of 0.1%, declining from 0.5% in the previous quarter."
While this information might provoke a little anxiety, there is some good news. Although the provincial government's new rules appear to have alarmed some developers, rental-only buildings are being built (in fact, one was recently constructed in the Erin Mills Town Centre area and another building with affordable units is coming to City Centre soon).
"…The number purpose-built rentals proposed for development continued to increase in Q2-2017, although at a much slower rate than previous quarters. A total of nine projects and 1,719 units were added to the proposed inventory during the second quarter, compared to additions of 2,453 units in Q1-17, 7,323 units in Q4-16 and 5,645 units added a year ago in Q2-2016. The total proposed inventory reached 30,400 units in Q2-17, which includes projects that may no longer proceed as a result of the rule change," the report reads.
So there you have it, house prices and sales are inching downwards on a month-to-month basis, but the rental market is still soaring.
Perhaps new affordable housing and rental-only projects envisioned for Peel provide some relief.